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Eurozone Headed for Japan-Like Deflation?

Eurozone Headed for Japan-Like Deflation?

6 Years ago | June 04, 2014 00:00:00

We heard an economist a couple of days ago on business TV talking about the deflationary spiral developing in the Eurozone. He said it was not the same, but it was similar to Japan. He said the problem with several nations in Europe were the same as in Japan. That was too much debt. He said that Japan, which has a massive debt to GDP ratio has survived only because of its deflation which drove interest rates to low enough levels that it was able to service its debts. He worries now that the government wants to drive Japanese inflation to 2.0% while 10-yr JGB’s pay only 0.60%. Do the math.  2.0% inflation and a 0.60% yield on bonds is going to lead to a heavy capital outflows, with ne

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